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Many proposals in report of Oireachtas Committee on Housing and Homelessness would hobble housing building and investment

patslatt

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Many proposals in report of Oireachtas Committee on Housing and Homelessness would hobble housing building and investment

See Committee calls for 50,000 social housing units - RTÉ News

The committee's proposed halt to home mortgage evictions would prove devastating for banks as they would be prevented from selling houses to recover mortgage loans in default. It would also weaken the banks' negotiating position against home owners exploiting strategic defaults who could afford to pay mortgages.

The result would be a big writedown of bank mortgage loans which would trigger requirements for banks to raise billions in new bank capital. Where would the capital be raised? The government would find it very difficult to budget for recapitalising AIB and TSB,while stock markets would be very reluctant to subscribe to bank shares as the proposed halt to mortgage evictions would be viewed as a blow to property rights.

What bank or financial institution would lend money on mortgages if the principal mortgage collateral, the home under mortgage, could not be repossesed? The resulting collapse in mortgage lending would cause a depression in housing building.

Do Irish people really want to help people who bought houses they could not afford? If so, are they willing to finance the billions in mortgage loan forgiveness that would enable home owners in default to continue paying the remaining balances owed? A €10 billion writedown in bank home mortgages would cost the average Irish household of four people about €10,000. That's money that would have to be diverted from spending on health care, for instance.

The committee's proposals to link rents to the consumer price index and restore sitting tenancies are also foolish as they would drive many landlords out of business,causing severe shortages of rental housing. If shortages of rental accomodation persist for a few years as likely, the market would correct shortages through rents rising faster than the CPI. In Dublin and Cork, housing supply has been hobbled by NIMBYism which is pandered to by councils. So most of the shortages were corrected on the demand side as tenants moved to shared accomodation, moved out of the cities to cheaper suburbs and moved back to live with parents. Also,people who had planned to move to Dublin and Cork were prevented from doing so by high rents.

In the future, if housing building revives, it is possible that rents could fall. But if legislation tied rents to CPI, landlords would be very reluctant to reduce rents.

Law abiding landlords would leave the rental market if introduction of sitting tenancies undermines the value of their properties. Their departure would give rise to Rachmanism, a word that describes ruthless,unscrupulous landlords like London's Rachman. Infamous for using ruthless means to force out sitting tenants in 1960s and 70s London,he ended up with a rental property empire. Key money, a big cash bribe to get to the head of a queue for rental housing, could become customary with Rachmanism

One good proposal of the committee is for a government agency to cut through the red tape of housing building. The Department of the Environment which has taken over the regulation of housing construction standards from councils could also take over that function, but if it does so it should leave local planning offices in place for local and regional input to housing planning permissions.

The committee's proposal that NAMA become a giant housing builder is a very bad idea. NAMA is a government agency, not a housing construction business. It was wise enough to retain on salary former owners of insolvent development projects,recognising its limitations in the construction management business.

What explains the poor quality of many committee proposals? The Dail's establishment politicians fear being outflanked by hard left parties like Sinn Fein and People before Profit, so they want to appear to be doing something politically populist and expedient, attacking symptoms in crisis management mode instead of finding cures.

Politically populist tendencies in the present Dail, especially the risk of caving to militant public sector pay demands at a time of zero eurozone inflation, could put Ireland back in economic recession. However, constitutions exist to save politicians from themselves and the Irish constitution will presumably preserve property rights under attack from the above economically abysmal proposals.

PS See http://www.politics.ie/forum/economy/248813-constitutional-proposal-right-housing-diversion-urgently-needed-urban-planning-reforms.html
 
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storybud1

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What will be the impact of more Eastern Europeans coming after Brexit ? of course they will work and pay rent to drive more housing , hopefully we can limit the free for life welfare tourists which has been an absolute fooking disgrace when you consider so many natives are still in negative equity 12 years after buying.

The key will be about getting land to build and to keep prices low, I would favour a tax free option to compensate landowners and their families over a period of time. The Lottery winner in the US can avail of the instant taxed win or a low tax win over time ? This should help take the land speculators out and stabilise house building as a service and not a flipping chance for speculators.
 

patslatt

Well-known member
Joined
Apr 11, 2007
Messages
13,637
What will be the impact of more Eastern Europeans coming after Brexit ? of course they will work and pay rent to drive more housing , hopefully we can limit the free for life welfare tourists which has been an absolute fooking disgrace when you consider so many natives are still in negative equity 12 years after buying.

The key will be about getting land to build and to keep prices low, I would favour a tax free option to compensate landowners and their families over a period of time. The Lottery winner in the US can avail of the instant taxed win or a low tax win over time ? This should help take the land speculators out and stabilise house building as a service and not a flipping chance for speculators.
NIMBYISM

The NIMBY disease which is pandered to by councils in Dublin, Cork and Galway makes speculation in the limited supply of serviced land profitable. Blame the councils and the national government for that.

Land banks created for big projects could be hobbled by the 3% tax on market value of vacant sites. Many land banks serve an economic function of supplying land to builders who haven't the money to buy land.
 


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